American Eagle Outfitters’ stock (NYSE: AEO), which sells men’s and women’s apparel and accessories under the American Eagle, Tailgate, Todd Snyder, and Aerie brands, experienced almost a 7% gain over the last week (five trading days) to levels of around $37 currently. But will the company’s stock see higher levels over the coming weeks, or is a decline in the stock imminent? According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price, returns for AEO stock average around 2.3% in the next one month (twenty-one trading days) period after experiencing a 7.2% rise in a week.
But how would these numbers change if you are interested in holding AEO for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning Engine to test AEO’s stock chances of a rise after a fall. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
- Earnings Miss In The Cards For American Eagle Stock?
- American Eagle Stock To Trade Higher Post Q4?
- This Stock Is A Better Pick Over American Eagle Outfitters
- American Eagle Stock Looks Attractive At $23
- What To Expect From American Eagle Outfitters’ Stock Post Q3?
- 18% Gains Left For American Eagle Stock?
IF AEO stock moved by -5% over five trading days, THEN over the next twenty-one trading days, AEO stock moves an average of 1.6%, which implies an almost flat excess return compared to the S&P500.
More importantly, there is a 53% probability of a positive return over the next twenty-one trading days and a 48% probability of a positive excess return after a -5% change over five trading days.
Some Fun Scenarios, FAQs & Making Sense of American Eagle Outfitters Stock Movements:
Question 1: Is the average return for AEO stock higher after a drop?
Answer: Consider two situations,
Case 1: AEO stock drops by -5% or more in a week
Case 2: AEO stock rises by 5% or more in a week
Is the average return for AEO stock higher over the subsequent month after Case 1 or Case 2?
AEO stock fares better after Case 2, with an average return of 1.8% over the next month (twenty-one trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 2.7% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next twenty-one trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how AEO stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer: If you buy and hold AEO stock, the expectation is over time the near-term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For AEO stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
You can try the engine to see what this table looks like for American Eagle Outfitters after a larger loss over the last week, month, or quarter.
Question 3: What about the average return after a rise if you wait for a while?
Answer: The average return after a rise is understandably lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although AEO stock appears to be an exception to this general observation.
It’s pretty powerful to test the trend for yourself for American Eagle Outfitters by changing the inputs in the charts above.